Beneath the elaborate crystal chandeliers that line a cavernous hall a stone's throw from Westminster, David Orr is grip and grinning his way through a crowd of officials and lawmakers. The loquacious Scot, who heads the National Housing Federation, appears equally at home pressing the flesh with ministers, mandarins and housing leaders.

But Orr has proved a thorn in the side of government – drawing blood when others drew back. Under his stewardship, the federation has issued a flurry of press releases warning of a tide of homelessness on the back of the coalition government's plans to prune back welfare and cut the cash available to build new homes.

Ministers have shot back. Just before the federation's national conference last September, the housing minister, Grant Shapps, launched a broadside against 10 housing association bosses for earning more than the prime minister. A few weeks later, Shapps hit out at the federation's claim that the government's safety net for those facing hardship as a result of swingeing housing benefit cuts amounted to a "drop in the ocean". "[The National Housing Federation] get this stuff wrong all the time," Shapps said.

The government now agrees to disagree with the federation, which represents about 1,500 non-profit housing organisations owning or managing just under 2m homes. It's a policy equivalent of a cold war.

The relationship will enter a new phase next week with the publication of the government's welfare reform bill – which aims to lop £18bn from the UK's benefit costs. While it is easy to tar welfare recipients as living off the state, Orr says the public is unaware how many working households rely on subsidised housing. Housing benefit provides means-tested support for the housing costs of 4.8 million poor families, including 1.6 million pensioner households. It will cost the taxpayer about £20bn this year. The important thing to note, says Orr, is that it provides help for people both in and out of work.

"If you take a salary of £15,000 a year and try to live in London, I can tell you that a one-bedroom flat in the capital will cost you £1,000 a month. It's impossible [to afford] for most people without help," says the chief executive.

While the coalition has argued that welfare bills are just too high, Orr says the government is attempting "an extremely risky strategy" of cutting benefits and forcing people to move out of secure tenancies to bring down costs. He points out that the Department for Work and Pensions own equality assessment as well as the government's independent social security advisers warned ministers "not to go ahead" with the first wave of housing benefit reforms, saying they risked increasing levels of homelessness and crime and would seriously disrupt poor children's schooling.

Social unrest

Orr, who worked for more than a decade with homeless people, says the new changes risk "social unrest". "I have no idea [why ministers did not listen]. I think the [upcoming welfare] reforms will add to the pressure that makes social unrest more likely," he says. "These reforms present real challenges. Britain is a remarkably cohesive place where people from a lot of different backgrounds rub along pretty well together. That's a product of a lot of work by housing associations, councils, voluntary organisations on the ground. All of that work will be undermined by these changes and cuts."

What about the idea that the coalition is as radical a force as Margaret Thatcher was when she handbagged Britain into shape during the 1980s? "A lot of people got hurt in that time," responds a grim-faced Orr.

The housing boss instead points to an influential study by the Chartered Institute of Housing, which calculates that because of the proposals, within 15 years, all two-bedroom properties in almost a third of England will be unaffordable to benefit recipients. "I am extremely anxious about such projections," says Orr.

"There are huge dangers about the impact on people's lives. We need to be building mixed communities where private and social housing sits [together]. Not just clearing out areas for rich people."

There is an argument, advanced by Shapps, that people should be encouraged to move to where there are empty houses rather than paying people to live where there is a shortage of homes. "The government says people will move, but if you live in Lewisham, where your friends and family are, why are you going to move to Burnley, where there are houses but no one you know?"

The federation has been taken aback by the scale of the welfare changes envisaged – and points out that the most dramatic cuts are buried deep in the fine print. Orr is particularly vexed about proposals to slash the housing benefit paid to almost 700,000 families living in social homes that could be considered "too big".

Orr says this is a particularly draconian measure which "compels" people to move if they are deemed to be "under occupying" properties. Under the new rules, a separate bedroom is only required by each married or cohabiting couple or any person aged over 21. Therefore, a couple with two adolescent sons would be penalised if they lived in a three-bedroom house.

The federation says another big group of losers will be lone parents, who cannot claim separate rooms for adults and children. "We should tackle under-occupation but cutting people's housing benefit and pushing them into poverty is not the answer," Orr says. "You'll end up with thousands of couples who are no longer able to offer their grown-up children a room to stay in, and many single parents will be pushed away from friends, relatives and support networks."

When he raises such concerns with government, ministers hear him out, but Orr says they are not listening. "I have tried to talk to them and will continue to do so. OK, they say my figures are wrong. Can I get their analysis? No."

Hard choices

Politics is about hard choices, he says, but social housing has borne the brunt of the cuts. "Why build a new aircraft carrier with no planes when you could have built 50,000 new homes?"

Orr is ramping up the rhetoric because, he says, "we are facing a catastrophe that has been 30 years in the making". He says that since the early 1980s owner occupation has become a British obsession. "We have created a housing market that encouraged a shortage of supply … People were very pleased to see the value of the houses rise."

The result, he says, was that rents rose as landlords raised them to cover mortgage payments, while the lack of affordable new housing means 1.8 million households are on a waiting list for a social home – provided either by the council or a housing association.

He points out that the hidden subsidy of allowing house sales to be free of capital gains tax far outweighs the payments to keep a roof over poor people's heads. "Until the credit crunch, we saw home ownership rise at 3% in real terms in Britain. It was barely 0.5% in western Europe. We are the ones out of step."

It was not meant to be like this. Housing associations, says Orr, were a model of public-private partnership – raising £60bn from the capital market over the last three decades, a figure that is 50% more than the £40bn government has given them. The bodies, which have tenants on their governing boards, have been radical in their approach to attracting people to their homes. Some have even opened schools under the academy programme to keep people living in the community.

Orr says the "big society" is an opportunity to look again at housing associations – but one the government has so far declined to take. "We can deliver a wide range of public services. I think there are ministers who understand that and others who see us as a threat."